Articles

Her Majesty in Service

2013-08-02

This article talks about the emergence and development of neoliberal economic thought in Israel from the mid-80s to the end of the first decade of the second millennium. It focuses on the role of the general Israeli media, and the business media in particular, in promoting this ideology, presenting and propelling it as the only exclusive intellectual and “objective” economic policy.

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Introduction

In a conference celebration held by the daily “The Marker”, the “Haaretz” newspaper’s economic supplement, Benjamin Netanyahu, the finance minister at the time, confessed that he was surprised by the size of the support that he gets from the business supplement and the newspaper itself when it comes to economic policies he works to implement. There is no doubt that the Finance Minister, and later the Prime Minister’s astonishment of this support is understandable. “Haaretz”, partisan to the Zionist left, considers Netanyahu and his right-wing government as quite bad for the future of Israel, as successive editorials show. On the other hand, in a closed-door meeting, Netanyahu regarded the “Haaretz” newspaper as one of the enemies of Israel alongside the Jewish-American columnist, Thomas Friedman, who is a fierce critic of Netanyahu’s policies.

In reviewing the newspaper’s position of economic policies adopted by Netanyahu from his first term as Prime Minister and Finance Minister (1996 – 1999), and later as Finance Minister in Ariel Sharon’s government (2003 – 2005), it shows very clearly the newspaper and its editors’ supportive position of the economic policies that Netanyahu sought to apply and consolidate, a strict neoliberal economic policy. “The Marker’s” position was no different from the rest of the major Israeli media’s position, and especially the media that dealt with the economic thought that Netanyahu propelled as the only economic ideology that would ensure Israel’s economic and financial durability.

The role played by the Israeli media, whether intentionally or unintentionally, in promoting the economic neoliberal ideology has had a severe impact on the consolidation of this thought and translating it into actions and executive programs, which have effected and continue to effect the country's residents on a daily and tangible basis.

Israel is transformed

Before we look at the media's role in consolidating the neoliberal economic policy, we must provide an overview of the development of neoliberal economic thought in Israel. Economists indicate that the mid-80s of the last century is considered the beginning of the official transition in the economic policy in Israel. The program of “economic stability”, which was launched in 1985, is considered the turning point of Israeli economy from one with socialistic features, to a liberal capitalistic economy. The immediate objectives of the economic stabilization program were three: reducing the rate of inflation (which reached 400%) at the beginning of that year); balance payments and stabilize the economy and return to a growth path. Although some sociologists claim that the neoliberal economic policy infiltrated into decision-making circles much before, there is a consensus that 1985 is the year of transition. The economic reform program redefined the relationship between the different groups in Israeli society, and this led to the status reinforcement of the groups benefiting from the neoliberal policy at the expense of the other groups. Under the new policy, the Bank of Israel became a central player in the economy, and its senior staff’s opinion became of great importance in shaping the country's economic trends. In practice, policy makers in the Bank of Israel and the Finance Ministry succeeded in moving Israel’s economy into a neoliberal era through creating structural changes in the monetary and fiscal policies, in the banking and financial sectors and in the social support policies.

From “We” to “I”

The above economic transformations in Israel led to a fundamental change in the social and economic structures of the state; similar to what happened in many other countries that underwent the same shifts from a quasi-socialist democratic economy to a liberal/neoliberal economic system in a Thatcher and Reagan style. An individual in Israel did not have a central position in the economy until the mid-80s; the average person was part of a social – economic system that protected him from various risks. The most famous of these systems, of course, is the public sector and the strong labor unions systems, and the vast majority of the workforce in Israeli society belonged to one of these two systems. The main matter provided for the individual by these systems was job and economic security, whether during work, or retirement. Therefore, on this basis, the average person’s preoccupation with economic matters was extremely limited, as there was no need to understand what those “above” work to identify and apply.

The entry of Israel into a neoliberal economic phase from the mid-80s, led, among many other issues, to a weakening of the two mentioned systems, the public sector and trade unions, and to the average individual leaving the circle of their protection to become primarily responsible for his economic situation now and in the future. In the framework of the new economic plan, Israel greatly reduced the citizens’ social welfare and care services, and transferred this responsibility to the individuals themselves. The liberalization of work controls in the capital markets, the entry of a lot of new players, and making way for the domestic and foreign commercial banks and investment funds, led to a greater role in the capital markets, and increasing interest of these institutions in the “individual investor”. They started to develop different investment “products” that could be marketed to the individual, such as equities and debt securities, etc., and began to view the individual/client as a human being, who is aware and has sophisticated economic knowledge that qualifies him to be responsible for his own destiny and economic and financial future.

The dynamics of the economic and social transformation mentioned above could not have continued without the presence and evolution of the media who kept pace and fed this transformation and interacted with it. The individual’s departure from the “protection” of the public sector and labor unions systems and his change into being primarily responsible for his economic and financial fate, has led to the emergence of a new situation in which the individual needed economic and financial information to correctly make decisions. The reforms, which affected the financial markets, turned them into an effective and interactive circuit in which thousands of citizens are daily involved and tens of thousands or more are affected by the outcome of the trading markets.

Within a short time, the media realized that the street was looking for daily economic news and information. Therefore, the leading daily newspapers started to expand their coverage of local and international economic news, and began to assign editors who specialize in the field of economic journalism and in coverage of the stock market on a daily basis. Stories and business personalities started to gain more space in the media. In the mid-80s, the first daily newspaper specializing in business news appeared, “Globes”, which is still published to this day. Naturally, the spread of the developing business media did not only extend to newspapers and print media, but later developed to include specialized television and radio programs, and many Internet sites of large or independent media.

It could be argued that the major surge witnessed by the business press took place at the beginning of the second millennium, when a number of specialized economic media were founded, such as “The Marker” newspaper and website, and “The Calcalist” (The Economist) newspaper and website, as well as other specialized sites that did not last. Therefore, who initiated the formulation and development of the economic media? Is there a relationship between the background of the founders and owners of these media and the editorial line adopted from the beginning?

A review of the Israeli media map and its evolution from around three decades ago to this day, reveals to the reader the depth of the relationship between the media, the private sector and the business community in Israel. The connection between the journalistic institutions and share capital is not strange, as these journalistic institutions are in the vast majority of cases, commercial companies seeking financial gain and profit for their respective owners. However, we find that the case of the Israeli media is different, because the ownership of the central media is restricted to a limited group of venture capitalists who own companies and various businesses in other economic sectors. Research conducted in 2011, under the title “Analysis of economic projections of the concentration and intersection of media ownership”, which was released by the Knesset Research Center, stated that the high degree of centrality in the Israeli media market is shown through the intersection of ownership of the various media. Under the excessive centralization suffered by the Israeli economy, we find that the majority of the mainstream media tracks active economic groups in different fields. This converts the issue of journalistic integrity, professional and objective standards into challenges faced by journalists and editors every morning. The same research mentions that “the Israeli economy is a relatively centralized economy, as in the Israeli credit market there is a high proportion of centrality. Therefore, the return on investment in the media in Israel is relatively low, and in some cases, it is negative. These data may prompt ownership of the newspapers and media, not from the premise of profitability or the creation of professional press, but for other considerations related to the additional commercial activity of the owners themselves, or out of a desire to influence public opinion and public debate in the context of this activity”.

Proof of the words stated in the above quotation recently occurred in the “Maariv” daily newspaper. Since the late 90s, this newspaper has suffered from financial hardship and cost the owners, the Nimrodi family, tens of millions of shekels in losses each year. It became a vivid example of the economic crisis that threatens the printed press sector in Israel. In early 2011, the “discount” investment group, owned by businessman Nochi Dankner decided to buy the newspaper and pumped into it approximately 400 million shekels in less than two years. This transaction raised eyebrows for two main reasons; The first reason being the lack of economic feasibility of such an investment in light of the crisis afflicting the media sector in general, and the second was that Dankner made this transaction while a group of his companies were suffering from worsening financial distress that threatened their survival in the market. Based on this background, analyzes unanimously concluded that the main reason behind Dankner buying “Maariv”, was to seek to control a media outlet to help him improve his image in public opinion, and respond to the wave of criticism he suffered on the pages and screens of the various Israeli media because of his losing administrative and investment approach. Indeed, evidence of the validity of the analysts’ opinion of the real intention of the “Maariv” deal did not take long to appear following the newspaper’s strong opposition to the recommendations of an official committee that recommended the need to reduce the level of centrality in the Israeli economy through the dismantling of the hierarchal investment groups, which control a large number of companies in different fields, headed by Nochi Dankner’s investment group. It was clear that the newspaper’s critical position of the Committee recommendations commensurate with the newspaper’s new owners’ interests.

Neoliberalism Consensus

We mentioned above that the evolution of economic journalism in Israel has been closely associated with the transformations that occurred in the economic policy from the mid-80s, with the shift to the neoliberal economic model. From this perspective, it was natural for the economic media to become the most important mechanism for promoting the new economic thought. Thus, we understand how the media adopted the basic neoliberal principles as the sole ideological framework. Accordingly, neoliberal views, such as reducing the government's role in the functioning of markets, privatization of services, changing the pattern of labor relations, and the weakening of unions and similar matters became quasi-“scientific” assumptions that cannot be discussed and represent objective and neutral economic realities, not perspectives that represent a specific ad valorem system out of other systems and views. The negative social consequences resulting from the adoption of the neoliberal model, such as high levels of poverty, widening gaps between the society strata, and a decline in health and social services, were presented by the business press as inevitable consequences of the general economic growth.

In an article about the role played by the business newspapers in the global economic crisis that hit the world's economies in 2008, the social scientist, Yossi Dahan said; “In the last three years, neoliberal thought has reached a scientific consensus and value judgment in the business press. This press lives on the income from the advertising campaigns of financial institutions, supports the approach that gives market forces freedom of action and the majority of its readers are from the rich strata. In Israel, the business press supported the neoliberal policy adopted by the decision-makers in Israel, headed by Benjamin Netanyahu”. Elsewhere, the author of the article shows how the business media was successful in converting a large portion of the employees in companies and financial institutions, such as managers, analysts and brokers, into media stars, and how they were successful in controlling the media circuit in order to have a clear impact on the analysis of events and interpretation of economic and social phenomena from a neoliberal perspective as the only perspective.

Political reality cannot be separated from economic reality, as both are the mirror of the other. The role played by the media in promoting neoliberal thought cannot be understood in isolation from the political changes that occurred in Israeli society around two decades ago. These changes were led by a sharp decline in the status of the Israeli left and the almost complete control of the right-wing parties over the political arena. There is no place here for extended talk about the reasons for the decline of the left, but this retreat also included an almost complete absence of left-wing economic thought that is contradictory to neoliberal thought with the exception of free thought.

Another proof of the business media’s entrenchment in the category of neoliberal thought appeared in the press coverage of the popular protest movement that shook the Israeli street in the summer of 2011. The wave of protests that began against the backdrop of difficult living conditions received widespread media sympathy, including the sympathy of the business newspapers, even though there was a consensus among many economists and sociologists that the origin of the problem was due to the neoliberal economic policy implemented in the country for the last three decades. However, the business media insisted on a dissenting opinion that believed that the problem is not in neoliberal thought itself, but in the “market failure” and the presence of other obstacles that have nothing to do with this thought. With this in mind, all the newspapers supported the recommendations of the “Trajtenberg” Committee, which was formed in the wake of the wave of protests. The Committee called for various socio-economic reforms; however they remained within the neoliberal conceptual framework.

A review of the history and development of the business press in Israel confirms that this press could not call for a transformation of the existing model, as it is ultimately an integral part of it.